ESSENTIALS of Arbitral award

Arbitration Award

What are the Essential elements of an Arbitral award?

According to the Arbitration and Conciliation Act, 1996 an Arbitral Award:

Shall be in writing;
Shall be signed by members of Arbitral Tribunal;
Shall state the reasons on which the Award is based;
Date and place of arbitration;
The Act provides that after passing the Award, a signed copy of the Award shall be delivered to each party. The Tribunal if required can also pass an interim arbitral award.

Correction and Interpretation of Arbitral Award- Section 33 of the Act deals with the correction and interpretation of Arbitral award. It provides that the Tribunal may correct the award within 30 days from the receipt of award. If the Tribunal finds the request for correction to be reasonable, then it shall make a correction or interpretation of a specific point or part of the award within 30 days of the receipt of request. However, if the Tribunal deems it necessary it can also extend the period of time within which it will make correction in the Award or interpretation of the Award.

The Act also makes provision for Additional Award– It states that unless otherwise agreed by the Parties, a party with notice to the other party may request the Tribunal for passing an Additional Award as to the claims presented in the Arbitral proceedings but erroneously omitted from the Arbitral Award.

Enforcement of Arbitral Award– Section 36 of the Act provides that if the time for making application to set aside an award under Section 34 has expired or the application has been refused then the Award shall be enforced under the Code of Civil Procedure in the same manner as a decree of a Court.

JUDICIAL DICTA

Unreasoned Arbitral Award [Section 31(1)]– In this case, the Petitioners filed for setting aside the award under Section 34 on the ground that the award passed by the Arbitral Tribunal is an unreasoned award and liable to be set aside in view of the provision under Section 31(1) of the Act. In the case of Hemadari Cements Pvt. Ltd. v. Walchandnagar Industries Ltd.x, the Division Bench of Andhra Pradesh High Court held that an award even if it is valid is liable to be set aside, if the award in question does not contain any reasons.

What is a reasoned or speaking award?

The Supreme Court in the case of Jajodea (Overseas) Pvt. Ltd. v. IDC of Orissa Ltd., settled the legal position that A speaking or reasoned award is one which discusses or sets out the reasons which led the Arbitrator to make the award. Setting out the conclusions upon the questions of issues that arise in the arbitration proceedings without discussing the reasons for coming to these conclusions does not make an award a reasoned or speaking award. A similar observation was made by the Court in the case of Union of India v. Hindustan Motors Ltd., wherein the Supreme Court stated that there is no elaborate discussion does not mean that the reasons have not been articulated. The rational basis of the award is revealed in the narration. In our opinion it is a speaking award, and not a silent award, though it speaks in few words. We must therefore proceed on this footing.

Stamping of Arbitral Award– On several occasions, the Courts have been confronted with the issue whether an arbitral award which is not stamped is enforceable or not. In the case of Naval Gent Maritime Ltd. v. Shivnath Rai Harnarain (I) Ltd.. In any case the issue of Stamp Duty cannot stand in the way of deciding whether the award is enforceable or not. The Supreme Court decided a similar issue in the case of M. Anasuya Devi & Anr. v. M. Manik Reddy and Ors., wherein the Apex Court had observed that the question as to whether the award is required to be stamped and registered, would be relevant only when the parties would file the award for its enforcement under Section 36 of the Act. It is at this stage the parties can raise objections regarding its admissibility on account of non-registration and non-stamping under Section 17 of the Registration Act. In that view of the matter the exercise undertaken to decide the said issue by the Civil Court as also by the High Court was entirely an exercise in futility. The question whether an award requires stamping and registration is within the ambit of Section 47 of the Code of Civil Procedure and not covered by Section 34 of the Act.

SETTING ASIDE OF ARBITRAL AWARD

Section 34 of the Act provides for setting aside of an Arbitral Award by the Court. The Act provides a comprehensive list of circumstances under which an Arbitral Award can be set aside by the Court and they are:

The party is under some incapacity;
Arbitration agreement between the parties is not valid;
Lack of notice of appointment of arbitrator or of holding of arbitral proceeding;
Arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration or it contains decisions on matters beyond the scope of submission of arbitration;
Composition of arbitral tribunal or arbitral procedure was not in accordance with the agreement of the parties;
The Court finds that the subject matter of the dispute is not capable of settlement by arbitration under the Law;
The Award is in conflict with the Public Policy